Vistance Networks, Inc. · NASDAQ:VISN
Vistance Networks — CommScope Holding Company — Q4 2017 Earnings Presentation
24 slides from Vistance Networks's earnings presentation, Feb 15, 2018
Slide 1: Fourth Quarter 2017 Results
Fourth Quarter 2017 Results February 15, 2018 Eddie Edwards Mark Olson President and Chief Executive Vice President Executive Officer and Chief Financial Officer
Slide 2: Safe harbor
Safe harbor Caution Regarding Forward Looking Statements This presentation or any other oral or written statements made by us or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. These forward-looking statemen
Slide 3: Agenda
Agenda • Full year 2017 highlights • Fourth quarter 2017 results • Segment review • Cash flow and capital structure • Capital allocation priorities • First quarter and full year 2018 outlook 3 3
Slide 4: 2017 Highlights
2017 Highlights Substantially completed complex IT system integration Achieved two-year cumulative BNS synergy target of $170 million Significant product development, such as High Speed Migration Extended long-term optical fiber supply partnership Acquired Cable Exchange Ongoing capital structure ma
Slide 5: Q4 2017 Results
Q4 2017 Results Consistent with guidance Revenue Operating Income Diluted Earnings Per Share (in millions) (in millions) $252 Adjusted(1) $224 Adjusted(1) $0.61 $1,179 $199 $0.55 $1,129 $1,120 $0.47 GAAP $119 $127 GAAP $92 $0.28 $0.26 $0.27 Q4 2016 Q3 2017 Q4 2017 Q4 2016 Q3 2017 Q4 2017 Q4 2016 Q3
Slide 6: CommScope Connectivity Solutions (CCS)
CommScope Connectivity Solutions (CCS) Revenue Operating Income (in millions) (in millions) Adjusted(1) $140 $139 $125 $681 $709 $694 GAAP $71 $43 $48 Q4 2016 Q3 2017 Q4 2017 Q4 2016 Q3 2017 Q4 2017 • High single digit revenue growth in Outdoor Network Solutions • Low single digit revenue decline in
Slide 7: CommScope Mobility Solutions (CMS)
CommScope Mobility Solutions (CMS) Revenue Operating Income (in millions) (in millions) $113 Adjusted(1) $84 $74 $498 $427 $420 $76 GAAP $56 $43 Q4 2016 Q3 2017 Q4 2017 Q4 2016 Q3 2017 Q4 2017 • Growth in India offset by declines in other regions, most notably in the U.S. • Confident in FirstNet opp
Slide 8: Cash Flow and Capital Structure
Cash Flow and Capital Structure Debt Maturities Cash Flow Highlights as of Dec 31, 2017 (in millions) Q4 2016(1) Q4 2017 FY 2016(1) FY 2017 (in millions, except ratio) Cash flow from operations $ 89 $ 251 $ 640 $ 586 Capital expenditures, net of LTM Adjusted EBITDA: $964 capital expeditures related
Slide 9: Capital Allocation Priorities
Capital Allocation Priorities Priorities for Cash 2017 Actions Reinvest in the Invested $185m in R&D and $69m in Capex business Acquired Cable Exchange for $105m Debt reduction Reduced debt by $210m(1) in 2017 and exceeded goal of $1B repayment since BNS acquisition Returns to shareholders Repurchas
Slide 10: Outlook
Outlook(1) Q1 2018 Guidance Full Year 2018 Guidance • Sales of $1.085 billion - $1.135 billion • Sales of $4.675 billion - $4.825 billion • Operating income of $93 million - $108 million • Operating income of $615 million - $660 million • Non-GAAP adjusted operating income of • Non-GAAP adjusted ope
Slide 11: Favorable Near-Term Business Environment
Favorable Near-Term Business Environment • FirstNet deployment and timing • Outdoor fiber connectivity builds and timing U.S. Telecom • M&A among customers Dynamics • Net neutrality • Transition toward 5G • Geographic mix • Higher material costs Other Business • Data center fiber growth Dynamics • I
Slide 12: Appendix: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures CommScope management believes that presenting certain non-GAAP financial measures provides meaningful information to investors in understanding operating results and may enhance investors' ability to analyze financial and business trends. Non-GAAP measures are no
Slide 13: Full Year 2017 Results
Full Year 2017 Results Revenue Operating Income Diluted Earnings Per Share (in millions) (in millions) $2.64 $1,051 $2.14 $882 $4,924 Adjusted(1) Adjusted(1) $4,561 GAAP $575 $478 GAAP $1.13 $0.98 2016 2017 2016 2017 2016 2017 Sales: Operating Results: Net Income & EPS: • Sales of $4.56 billion, dow
Slide 14: Segment Full Year 2017 Results
Segment Full Year 2017 Results CCS Revenue CMS Revenue (in millions) (in millions) $2,966 $1,958 $2,810 $1,751 2016 2017 2016 2017 CCS Operating Income CMS Operating Income (in millions) (in millions) $632 $419 $526 $356 Adjusted(1) Adjusted(1) $284 $236 GAAP $291 $242 GAAP 2016 2017 2016 2017 (1) S
Slide 15: Statements of Operations
Thre e Months Ende d Year Ende d Statements 2017 De ce mbe r 31, 2016 2017 De ce mbe r 31, 2016 of Operations Net sales $ 1,120,432 $ 1,178,906 $ 4,560,582 $ 4,923,621 Operating costs and expenses: Cost of sales 705,778 689,018 2,788,688 2,890,032 Selling, general and administrative 190,697 215,130
Slide 16: Balance Sheets
De ce mbe r 31, 2017 2016 Balance Sheets Assets Cash and cash equivalents $ 453,977 $ 428,228 Accounts receivable, less allowance for doubtful accounts of $13,976 and $17,211, respectively 898,829 952,367 Inventories, net 444,941 473,267 Prepaid expenses and other current assets 146,112 139,902 (In
Slide 17: Statements of Cash Flows
Thre e Months Ende d Ye ar Ende d De ce mbe r 31, De ce mbe r 31, Statements of 2017 2016 2017 2016 Operating Activities: Net income $ 53,581 $ 54,466 $ 193,764 $ 222,838 Adjustments to reconcile net income to net cash Cash Flows generated by operating activities: Depreciation and amortization 95,46
Slide 18: Sales by Region
Sales by % Change Region Q4 2017 Q4 2016 YOY United States $ 561.9 $ 623.7 (9.9) % Europe, Middle East and Africa 243.9 240.1 1.6 Asia Pacific 224.0 224.8 (0.4) (Unaudited -- In millions) Central and Latin America 68.5 67.9 0.9 Canada 22.1 22.4 (1.3) Total Net Sales $ 1,120.4 $ 1,178.9 (5.0) % % Cha
Slide 19: Segment Information
Sales by Segment Segment % Change Q4 2017 Q3 2017 Q4 2016 S equential YOY Information Connectivity Solutions $ 693.8 $ 708.7 $ 681.3 (2.1) % 1.8 % Mobility Solutions 426.6 420.1 497.6 1.5 % (14.3) % Total Net Sales $ 1,120.4 $ 1,128.8 $ 1,178.9 (0.7) % (5.0) % (Unaudited -- In millions) Non-GAAP Adj
Slide 20: Adjusted Operating Income and EBITDA Reconciliation by Quarter
Adjusted Operating Income and Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 Adjusted Operating income, as reported $ 91.7 $ 126.8 $ 137.8 $ 121.4 $ 119.4 Amortization of purchased intangible assets 68.1 68.3 67.0 67.6 72.9 Restructuring costs, net 19.3 5.4 13.8 5.4 18.4 EBITDA Equity-based compensation As
Slide 21: Quarterly Adjusted Operating Income Reconciliation by Segment
Fourth Quarter 2017 Non-GAAP Adjusted Operating Income Reconciliation by Segment Quarterly Connectivity Mobility S olutions S olutions Total Operating income, as reported $ 48.2 $ 43.4 $ 91.7 Adjusted Amortization of purchased intangible assets 44.8 23.3 68.1 Restructuring costs, net 16.6 2.6 19.3 E
Slide 22: Full Year Adjusted Operating Income by Segment
Full Year Year Ended December 31, 2017 Non-GAAP Adjusted Operating Income Reconciliation by Segment Adjusted Connectivity Solutions Mobility Solutions Total Operating Operating income, as reported $ 242.0 $ 235.6 $ 477.6 Amortization of purchased intangible assets 175.5 95.5 271.0 Restructuring cost
Slide 23: Adjusted Net Income Reconciliation
Adjusted Net Three Months Ended Year Ended December 31, December 31, 2017 2016 2017 2016 Income Operating income, as reported $ 91.7 $ 119.4 $ 477.6 $ 574.8 Adjustments: Amortization of purchased intangible assets 68.1 72.9 271.0 297.2 Reconciliation Restructuring costs, net 19.3 18.4 43.8 42.9 Equi
Slide 24: Outlook GAAP to Non-GAAP Reconciliation
Outlook GAAP Outlook to Non-GAAP Three Months Ended March 31, Full Year Reconciliation 2018 2018 Operating income $93 - $108 $615 - $660 Adjustments: (Unaudited -- In millions) Amortization of purchased intangible assets $70 $265 Equity-based compensation $12 $55 (1) Restructuring costs, integration
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